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Unemployment claims fall to another 7-month low

NEW YORK (CNNMoney) -- The number of Americans filing for their first week of unemployment benefits dipped for the third straight week, breaking another seven-month low.

About 388,000 people filed for initial unemployment benefits in the week ended Nov. 12, the Labor Department said Thursday. It marked the lowest level since April 2 and a drop from the revised 393,000 claims in the prior week.

Initial claims measure the number of first-time applications for unemployment benefits. Even though not all those claims end up being approved by the government, they're considered a good measure of the job market's strength.

Lower claims, now for three weeks in a row, are considered an encouraging sign that layoffs could be slowing and more robust job growth could be in the pipeline.

"Companies are hearing and reading about gloom, but seeing decent sales, so layoffs are falling," Ian Shepherdson, chief U.S. economist for High Frequency Economics said in a note to clients.

Amid the Great Recession, weekly initial claims had risen as high as 659,000 in March 2009. As the job market started to improve, they eventually retreated to as low as 375,000 in February this year.

But then the economy was hit by several shocks, including the earthquake in Japan and rapidly rising prices for raw materials like oil. The jobs recovery slowed in the meantime, but now that the effects of those temporary shocks are fading, various readings on the economy -- including initial claims -- are improving once again.

Economists often look for claims to drop below 400,000 each week, to signal that job growth is strong enough to bring the unemployment rate down.

That said, the figure tends to be a choppy, so economists also look at a four-week moving average to smooth out volatility. At 396,750 last week, the four-week moving average is now also hovering at its lowest level since April, another sign of improvement.

Meanwhile, continuing claims -- which include Americans filing for their second week of claims or more -- are hovering at their lowest level since September 2008.

In the week ended Nov. 5, the most recent week available, continuing claims fell to 3,608,000, marking a 57,000 decrease from the week before.